With budget deadline looming, lawmakers running out of options

Monday

Jun 29, 2009 at 12:01 AMJun 29, 2009 at 6:10 AM

llinois has been in this position before, starting a new fiscal year without having a budget in place. What makes this year different is the backdrop of the state's severe financial problems and the consequences of dealing with those problems, including tax hikes and/or program cuts. A look at the options lawmakers have.

Doug Finke

Tuesday marks the last day of the state's 2009 fiscal year, and the last day that the current budget remains in effect.

It also is the day both the Illinois House and Senate will be in session taking another stab at resolving the state's budget problems.

Illinois has been in this position before, starting a new fiscal year without having a budget in place. What makes this year different is the backdrop of the state's severe financial problems and the consequences of dealing with those problems, including tax hikes and/or program cuts.

Here are the options lawmakers have this week:

Raise taxes

Never a favorite option for politicians, raising taxes has been Gov. Pat Quinn's preferred solution since he presented his budget plan to lawmakers in March.

There are still two options floating around. One raises the state income tax for individuals by 50 percent, from a rate of 3 percent to 4.5 percent. It will expire after two years unless lawmakers extend it.

The other raises the state income tax to 5 percent, a 67 percent increase. It also extends the state sales tax to myriad services that are not now taxed. The plan raises substantially more money than the other bill and makes the increases permanent.

The Senate approved the higher increase, but the House hasn't considered it. The House, meanwhile, took up the Quinn proposal, but it did not get enough votes to pass. Now that it's June, any tax hike needs extra votes to pass – 36 in the Senate and 71 in the House.

One problem is that even if lawmakers take the politically risky path of raising taxes, the Quinn administration say that cuts will be necessary, not the least of them eliminating 2,200 jobs and requiring workers to take 12 unpaid days off. It is part of $1 billion in cuts Quinn is proposing to satisfy demands that the state needs to cut spending no matter what. However, for some lawmakers it provides the excuse necessary to oppose a tax hike – why increase taxes if the budget is going to be cut anyway?

"I don't think anyone in the building thinks (House Speaker Michael) Madigan will call it for a vote," Leitch said.

Revise what’s been done, but don’t raise taxes

Raising taxes isn't the only way to find more money to spend. One is to go further into debt.

The House approved a plan Monday to borrow money to make next year's payment to the state pension systems. The Senate is expected to approve it Tuesday. Doing that will free up about $2.2 billion that can then be used for other spending, particularly for human service programs now facing cuts.

There are other gimmicks that can be used to further close the budget hole without taxes. Lawmakers can overestimate tax collections and underestimate some expenses to make the budget look balanced on paper. That, too, would allow money to be moved around and spent on programs now facing cuts.

All of this can buy Quinn and the legislature more time. After January 1, only regular majorities are needed to pass bills, including a tax hike. Also, some believe the economy will begin to rebound by then, making both a tax hike and severe cuts unnecessary.

However, in the meantime, Quinn might pull the trigger on the severe budget cuts he said are necessary without a tax hike. Those cuts will fall hard on community organizations that provide a variety of services on behalf of the state using state funding.

Quinn could also decide to veto budget bills, forcing lawmakers to return quickly to address the budget. Their option, of course, would be to quickly override the veto, leaving Quinn with a budget he has said is unacceptable.

Pass a temporary budget

This is the idea favored by Republicans. Senate President John Cullerton, D-Chicago, said he is willing to go along with the idea. Quinn, though, said he is opposed to the idea.

Ideally, passing a temporary budget would keep state government running and spare human service programs the worst of the cuts until a permanent compromise is worked out on the budget. It would give lawmakers more time to work through the thorny issues of making reasonable cuts and possibly enacting the budget "reforms" sought by Republicans, such as changing pension benefits and moving Medicaid recipients into managed care programs.

That assumes, though, that a compromise can be reached. Plenty of lawmakers are skeptical that a temporary budget will do anything but delay a final solution, just giving everyone an excuse to further drag out a resolution. If Republicans and Democrats haven't been able to compromise in the six moths the session has been going, they argue, what's going to change by extending it another month or two?

Do nothing

This is not a metaphor. Lawmakers could leave Springfield without passing a tax hike, revising the budget or doing anything else. They approved a spending plan in May that seriously underfunds human service needs, but still fits the definition of a state budget. They have so far not formally sent all of the pieces to Quinn. Until they do, Quinn can't either sign or veto the bills.

In the absence of anything else, Quinn could steal a page from former Gov. Rod Blagojevich and keep lawmakers in Springfield by calling a succession of special sessions. History shows that calling special sessions wasn't a popular or particularly successful maneuver and there's no guarantee it will work any better under Quinn.